Pages

FPM Moot-Points:

Tweet Me Please!

Monday, 30 September 2013

No Smoke without Fire – A Denouement

FPM insiders are
somewhat surprised at the impending final resolution or clarification of the
'SAC-saga'. A multi-year investigation led by the US Department of Justice which is
imminently unfolding – with the next fixed date November 18, being the
commencement of criminal trial against senior portfolio manager at SAC Capital Michael
Steinberg. The climaxing of the largest investigation and prosecution into insider trading in the United States may tantamount to a mere null and void result! Are Steven
Cohen and SAC Capital going to receive a ‘get-out-of-jail’ card? Really, we are
always aghast at the masquerading theatrics without substance - and we’re not
referring to Hollywood films! Read our full
“No Smoke Without Fire” to see exactly how aghast.

The critical
point from the recent financial pressabout
SAC Capital, is that the web of
securities fraud manager may evade criminal conviction. Simply by letting
money talk, that is by entering negotiations for a settlement of the prosecution’s
case. As was reported in the Reuters noise on September 25th : “SAC
Capital and prosecutors have since opened preliminary settlement talks in an
attempt to resolve the criminal indictment...”. (Click below url link
Cohen's
SAC Capital up 13 pct for year for full Reuters story. A simple thinking individual with pursed lips may nod
his head acceptingly and claim nothing tremendously new or interesting about an out-of-court
financial settlements as regards financial moguls, especially in aftermath of
the US
housing-led financial crisis malfeasance. Malfeasance or misdemeanours, which FPM repeatedly
likens to the proverbial tip-of-the-iceberg; mainstream reported financial
wrongdoings are only the visible tiny portion and not reflecting the unseen
gigantic portion submerged.

SAC which was charged
with separate criminal and civil charges, at the 11th-hour on 19th
July 2013 before the 5-year statute of limitation kicked-in, seems now to be
offering one final ‘global’ settlement for insider-trading case related to SAC
to end.

Presumably such
a final settlement is intended for current outstanding cases and to prevent any
future prosecution of Mr Cohen himself. Remember it was only on 15th
March this year that Mr Cohen personally forked out a record total $616 mn to
settle two separate civil cases related to SAC sub-fund PMs.Mathew Martoma of CR Intrinsic and Jon
Horvath of Sigma Capital cases settled for $602 mn and $14 mn respectively. Mr
Martoma’s criminal indictment case has been rescheduled from November to
January 2014. In our restricted report ‘No
Smoke Without Fire’, FPM speculate on the likelihood of this close
associate of Mr Cohen squealing before the grand jury or proffering evidence in
exchange for leniency in his sentencing. Alternatively, how much personal
pay-off may be needed for Mr Martoma to accept prison time to fit the crime?
Prison time may be sore point for ‘cute’ looking Mr Martoma! Of course while

While Mr Cohen
himself has been implicated in past and pending US criminal cases of insider
trading, he has not been directly named in criminal indictment documents or has
ever been charged. FPM skews the old adage into “The bigger they are the harder
they are to fell, especially where money is concerned.” In “No Smoke
Without Fire” we mention other hedge fund luminaries and executives that have had
the grace of political and financial clout and connections to avoid conviction
and prison sentence. Among others we identify those potentially having engaged
in insider trading. Such as hedge found founder billionaire Arthur Samberg of Pequot
Capital Management and prominent Wall Street executive John Mack, who also
chaired Morgan Stanley.

FPM’s restricted
circulation of “No Smore Without Fire”, together with extracts and supplements
published on this blog, have been successful in conveying the negative
reputation risk of being invested with an asset manager in ongoing insider
trading investigations. Via
word-in-your-ear enquiries with Blackstone Group affiliates we believe we were
indicatively influential in the private equity giant redeeming investor money from
SAC Capital. Following our active resistance modus operandi, FPM associated Blackstone’s alpha-at-any-cost savvy
and / or slack due diligence in being long-invested and vehemently committed to
Mr Cohen, amidst multi-year investigation by prosecuting federal authorities.
In most scenarios most investors faced with reputation risk would reasonably be
expected redeem investments first then ask questions later. We think the
fall-out from even a financial settlement without acknowledgement of
culpability to the SACs saga will indelibly
tarnish Blackstone’s reputation in hedge fund investments. Not to mention irrevocably
damaged reputation to other less high profile partners of SAC, who have vocally
and publicly allied themselves. We know that kowtowers and sycophants to the
117th richest man in Forbes ranking lists inevitably exist, but FPM in naming and shaming propound our
reputation risk thesis by highlighting one such specimen. Anthony
Scaramucci, managing partner of SkyBridge Capital, a fund-of-funds manager, has
been particularly unabashed in supporting the monied-class of Mr Cohen. On the
day of SAC’s federal indictment on criminal charges of insider trading, Mr Scaramucci
appeared on CNBC's
"Halftime Report" to lend his smarmy affiliation to SAC – see
this transcript:

"So I think right now I think we just have to feel
bad for the employees there and for the families associated with this. I have
said long ago that if they have a case and it's a substantial one, let's bring
it. Obviously, the presumption is still on innocence both for the firm and for
Steve. That's the way our criminal justice system works. But the government has
that case. I hope Steve and his team will get the opportunity to say their side
of the story as well. But as it relates to public policy and things like that,
fraud is a terrible thing, and I hope to God that they will be innocent, but if
they're not, obviously we'll do what's prudent for our investors as everyone
else would."

And watch this
video link to compare Mr Scaramucci’s - affectionately known as the "The
Mooch" - excitement and enthusiasm about vehemently supporting SACs in
November 2012 as CNBC discuss: Will SAC Face
Redemptions?

Of course FPM
filches the above assailant points buried in obfuscating headline stories. This
time the misleading Reuters noise mentioned above had headline about SAC’s
year-to-date performance, see Cohen's
SAC Capital up 13 pct for year -source. The dumbly published story under mainstream financial media Reuters,
with Matthew Goldstein as ‘jobsworth’lead-writer,
is the kind of pandering journalism that is tantamount to mere paid-for
financial propaganda. Of course at the
centre of such tripe is SAC’s PR-firm Sard Verbinnen & Co and
lead-spokesman Jonathan Gasthalter. How many unofficial and official lunches
have Reuters had at the PR-firm’s expense, we rhetorically ask! While cognisant
of motto “No such thing as a free lunch!”. So the story is not just ‘dumbly’
edited but connivingly intended, one may reasonably suspect. This kind of
concealed reporting of the key facts assuages financial herd that SAC’s
multi-year case is proceeding and business as usual at the firm. Starkly, FPM
point out that no criminal charge has been brought to the door of the man
presiding over the web of fraud, Mr Steven Cohen. FPM is not alleging fraud at
SAC or by Mr Cohen but merely explosively enunciating the July 19th,
2013 criminal indictment against SAC Capital, which states “…insider trading that was
substantial, pervasive and on a scale without known precedent in the hedge fund
industry”. And if that’s thrown out in case closure as unsubstantiated
libellous verbiage, then we corroborate with US Manhattan Attorney Preet Bharara’s
, recital describing SAC as “a veritable magnet for market cheaters”.
FPM network would not believe Mr Bharara’s personality and character is given
to hyperbolic statements.